What is the meaning / definition of Open Pricing in the hospitality industry?

The great thing about pricing by most hotels around the globe is that nothing is set in stone. That is, there can be flexibility where prices have to sometimes be pitched at differing levels, according to the various target markets and distribution channels involved. This pricing approach, known in the Hospitality Industry as Open Pricing, is an ideal option for hotels operating independently, but it can also be an adopted method for entire hotel chains and groups!

Having the choice to set prices openly also means that hotel revenue management teams can more accurately forecast anticipated income from numerous distribution channels.

Open Pricing gives them the option to set rates for all channels, room types and dates independently of each other, without closing any off in their efforts to maximise revenue.

To better understand Open Pricing, let’s consider an imagined scenario faced by so many hotels worldwide seeking to boost income in what is an intensely competitive industry:

A luxury hotel on Berlin’s Breitscheidplatz has forged a reputation for providing guests with ‘the ultimate exclusive hotel experience’, in a lavish, almost impossibly sumptuous environment. Their prices are set towards the higher end of the spectrum, but it is this sense of ‘joining the elite’ that attracts a certain type of guest. However, during January up to mid-February bookings always drop, due to seasonal and economic factors in Germany; therefore the hotel must find a way to attract guests who perhaps cannot afford the hotel’s luxury breaks, but maybe could meet the cost of a lower priced hotel experience. The solution for the hotel is to utilise its Open Pricing policy (when targeting different users at different budgets). This would allow them to decrease prices temporarily, to ensure full occupancy during periods notorious for low demand, until interest in their ‘ultimate exclusive hotel experiences’ picks up again from Mid-February, as it always does year after year.

To give you more perspective, please consult our blog articles on pricing strategies for hotels:

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